Business Organisation and Management BOM
Solved Question Paper 2020-21 (December)
1
SEM TDC BOM (CBCS) DSC CC 103
2 0 2 1 (March)
COMMERCE (Discipline Specific Course)
Paper: CC–103
Full Marks: 80
Pass Marks: 32
The figures
in the margin indicate full marks for the questions
1. Answer
the following questions as directed:
a) What is meant by liberalization of economy? 1
Ans: liberalisation refers to a
reduction or elimination of government restrictions in the areas of social,
political and economic policies.
b) ‘Make in India’ and ‘Made in India’ denote same meaning. 1 (Write True or False)
Ans: Flase
c) Promotion is an Internal source of recruitment. (Fill in the blank)
d) Mention two functions of ‘Securities and
Exchange Board of India’ (SEBI). 2
Ans: Regulates the operations of depositories,
regulates the operations of stock exchanges.
e) Write the full form of MSME. 1
Ans: Micro, Small and Medium Enterprise.
f) Mention two principles of management
evolved by Henry Fayol. 2
Ans: Unity of Command, Unity of Direction
2. Give
short accounts on the following: 4×4=16
a) Importance of
Service Sectors.
Ans:
b) Importance of
Planning.
Ans: Planning is of vital importance in the
managerial process. No enterprise can achieve its objectives without systematic
planning. “Planning is the heart of management” The following points highlight
the importance of planning function of management:
a.
Planning
provides directions: By stating i n advance how work is to be
done, planning provide direction for action. If goals are well defined,
employees are aware of what the organisation has to do and what they must do to
achieve those goals. Departments and individuals in the organisation are able
to work in coordination. Planning keeps the organisation on the right
path. If there was no planning, employees would be working in different
directions and the organisation would not be able to achieve its goals
efficiently.
b.
Planning
reduces the risks of uncertainty: Business enterprises operate in an
uncertain environment and face several types of risks. Planning enables these
enterprises to predict future events and prepare to face the unexpected events.
With the help of planning, managers can identify potential dangers and take
steps to overcome them. Thus, planning helps risk and uncertainty.
c.
Planning
facilitates decision-making: Decision-making involves searching for
various alternative courses of action, evaluating them and selecting the best
course of action. Under planning, targets are laid down. With the help of these
targets, managers can better evaluate alternative courses of action and select
the best alternative. Plans lay down in advance what is to be done
and how it is to be done. Therefore, decisions can be taken with greater
confidence.
d.
Planning
reduces overlapping and wasteful activities: Since planning ensures clarity in
thought and action, work is carried on smoothly without interruptions. There is
no confusion and misunderstanding. Useless and redundant activities are
minimized or eliminated. It is easier to detect inefficiencies and take corrective
measures to deal with them.
e.
Planning
promotes innovative ideas: Planning is thinking in advance and,
therefore, there is scope of finding better ideas and better methods and
procedures to reach the objectives/goals of the enterprise. This forces managers
to think differently about the future of the organisations from the present.
Thus, planning makes the managers innovative and creative.
c) Communication
Barriers.
Ans: Communication is the process of
passing information and understanding from one person to another, anything that
obstructs the free flow of communication is referred to us Barrier of
communication. E.g. Problem in encoding and decoding, wrong or defective
communication channel, noise in the channel etc. Barrier may arise at any of
the following level:
a)
Sender
oriented,
b)
Receiver
oriented
Sender-oriented barriers could be voluntary or involuntary. At any cost, efforts should be made on the part of the sender to identify and remove them. As the sender is the originator of communication, he should be extremely careful not to erect barriers. If his interaction gives rise to or indicates that there are barriers, the communication comes to a grinding halt. Some of the barriers that are sender-oriented are as follows:
1. Organizational barriers (SENDER’S
ORIENTED)
2. Semantic barriers (SENDER’S
ORIENTED)
3. Mechanical barriers (SENDER’S
ORIENTED)
Receiver can also have some barriers in the course of the interaction. Although his role in the initial phase is passive, he becomes active when he starts assimilating and absorbing the information. He is equally to blame if the situation goes awry and communication comes to a stop, or there is miscommunication. Some of the barriers emanating from the side of the receiver are as follows:
1. Physical barriers (RECEIVER’S
ORIENTED)
2. Socio- psychological or personal barriers (RECEIVER’S ORIENTED)
d) Product Life Cycle.
Ans: Product Life Cycle
A product is like a human being. It is born, grows up fast, matures and then finally passes away. Product life cycle is the stages through which a product or its category bypass. From its introduction to the marketing, growth, maturity to its decline or reduce in demand in the market. Not all products reach this final stage, some continue to grow and some rise and fall. In short, The PLC discusses the stages which a product has to go through since the day of its birth to the day it is taken away from the market.
However, the basic difference in case of human beings and products is that a product has to be killed by someone. Either the company (to bring better products) or by competition (too much external competition). There are several products in the market which have lived on since ages (Light Bulbs, Tubelights), whereas there are others which were immediately taken off the shelf (HD DVD).
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3. (a) Describe the role played by the
Small Manufacturing Enterprises in the economic development of a country.11
Ans:
Or
(b) Explain
the concept of ‘Globalization’. Discuss its advantages.4+7=11
Ans: Meaning of Globalisation
Globalizations are the outcome of the policies of liberalisation and
privatisation. Globalisation is generally understood to mean integration of the
economy of the country with the world economy, it is a complex phenomenon. It
is an outcome of the set of various policies that are aimed at transforming the
world towards greater interdependence and integration. It involves creation of
networks and activities transcending economic, social and geographical
boundaries.
Globalisation involves an increased
level of interaction and interdependence among the various nations of the
global economy. Physical geographical
gap or political boundaries no longer remain barriers for a business enterprise
to serve a customer in a distant geographical market.
In simple words, The term globalization can be defined as the
opening one's economy toward the world economy. It means to integrate the
domestic economy with world economy. The govt. of India under the prime
minister ship of P. V Narasimha introduced liberalisation, privatisation and
globalization during 1991 .Due to globalization the multinational corporations
have been very popular. These corporations transact their business activities
more than one countries.
Benefits of Globalisation
a)
Increased
Competition: One of the most visible effects is the improved quality of
products due to global competition. Customer service and the ‘customer is the
king’ approaches to production have led to improved quality of products and
services. As the domestic companies have to fight out foreign competition, they
are compelled to raise their standards and customer satisfaction levels in
order to survive in the market.
b)
Employment:
With
globalisation, companies are moving towards the developing countries and hence
generated employment for them. It has given an opportunity to invest in the
emerging markets and tap up the talent which is available there. In developing
countries, there is often a lack of capital which hinders the growth of
domestic companies and hence creates unemployment. In such cases, due to global
nature of the businesses, people of developing countries too can obtain gainful
employment opportunities.
c)
Investment
and Capital Flows: A lot of companies have directly invested in
developing countries like Brazil and India by starting production units.
Companies which perform well attract a lot of foreign investment and thus push
up the reserve of foreign exchange.
d)
Spread of
Technical Know-How: While it is generally assumed that all the
innovations happen in the Western world, the know-how also comes into
developing countries due to globalisation. Without it, the knowledge of new
inventions, medicines would remain cooped up in the countries that came up with
them and no one else would benefited. The spread of know –how can also be
expanded to include economic and political knowledge, which too has spread far
and wide.
e)
Spread of
Culture: Not all good practices were born in one civilization. The world
that we live in today is a result of several cultures coming together. People
of one culture, if receptive, tend to see the flaws in their culture and pick
up the culture which is more correct or in tune with the times. Societies have
become larger as they have welcomed people of other civilization and
backgrounds and created a whole new culture of their own. Cooking styles,
languages and customs have spread all due to globalization. The same can be
said about movies, musical styles and other art forms. They too have moved from
one country to another, leaving impression on a culture which has adopted them.
4. (a) “A Cooperative Society is formed to serve its
members and not to earn profit.” Do you agree with this statement? Discuss.11
Ans:
Or
(b) What is
International Business? Discuss the basic features of international business. 4+7=11
Ans: International Business
Business
transaction taking place within the geographical boundaries of a nation is
known as domestic or national business. It is also referred to as internal
business or home trade. Manufacturing and trade beyond the boundaries of one’s
own country is known as international business.
International
or external business can, therefore, be defined as those business activities
that take place across the national frontiers. It involves not only the
international movements of goods and services, but also of capital, personnel,
technology and intellectual property like patents, trademarks, know-how and
copyrights.
In the words of Michael R. Czinkota ,” International
business consists of transactions that are devised and carried out across national borders to
satisfy the objectives of the individuals, companies and organisations. These transactions take on various forms
which are often interrelated.”
In the words of John D. Daniels and Lee H.
Radebaugh, “ International business is all business transactions — private and governmental — that involve two or
more countries. Private companies undertake such transactions for profits; governments may or may not do
the same in their transactions.”
The
important features of international business are as follows:
a) Large scale operation: In international business, all the operations are conducted on a very huge scale. Production International Business and marketing activities are conducted on a large scale. It first sells its goods in the local market. Then the surplus goods are exported.
b) Integration of economies: International business integration (combines) the economies of many countries. This is because it uses finance from one country, labour from another country, and infrastructure from another country. It designs the product in one country, produces its part in many different countries and assembles the product in another country. It sells the product in many countries, i.e. in the international market.
c) Dominated by developed countries and MNCs: International business is dominated by developed countries and Japan dominated (fully control) foreign trade. This is because they have large financial and other resources. They also have the best technology and research and development (R & D). They have highly skilled employees and managers because they give very high salaries and other benefits. Therefore, they produce good quality goods and services at low prices. This helps them to capture and dominate the world market.
d) Benefits to participating countries: International business gives benefits to all participating countries. However, the developed (rich) countries get the maximum benefits. The developing (poor) countries also get benefits. They get foreign capital and technology. They get rapid industrial development of the developing countries. Therefore, developing countries open up their economies through liberal economic policies.
e) Keen competition: International business has to face keen (too much) competition in the world market. The competition is between unequal partners i.e. developed and developing countries. In this keen competition, developed countries and their MNC s are in a favourable position because they produce superior quality goods and services at very low prices. Developed countries also have many contacts in the world market. So, developing countries find it very difficult to face competition from developed countries.
f) Special role of science and technology: International business gives a lot of importance to science and technology. Science and Technology (S & T) help the business to have large-scale production. Developed countries use high technologies. Therefore, they dominate global business. International business helps them to transfer such top high-end technologies to the developing countries.
g) International restrictions: International business faces many restrictions on the inflow and outflow of capital, technology and goods. Many governments do not allow international businesses to enter their countries. They have many trade block, tariff barriers, foreign exchange restrictions, etc. All this is harmful to international business.
h) Sensitive nature: The international business is very sensitive in nature. Any changes in the economic policies, technology, political environment, has a huge impact on it. Therefore, international business must conduct marketing research to find out and study these changes. They must adjust their business activities and adapt accordingly to survive changes.
5. (a) Discuss the various steps
involved in the ‘Decision-making Process’. 11
Ans: Steps Involved In Decision Making Process
Decision-making
involves a number of steps which need to be taken in a logical manner. This is
treated as a rational or scientific 'decision-making process' which is lengthy
and time consuming. Such lengthy process needs to be followed in order to take
rational/scientific/result oriented decisions. Drucker recommended the
scientific method of decision-making which, according to him, involves the
following six steps:
1.
Identifying the Problem: Identification of the
real problem before a business enterprise is the first step in the process of
decision-making. It is rightly said that a problem well-defined is a problem
half-solved. Information relevant to the problem should be gathered so that
critical analysis of the problem is possible. This is how the problem can be
diagnosed. Clear distinction should be made between the problem and the
symptoms which may cloud the real issue.
2.
Analyzing the Problem: After defining the
problem, the next step in the decision-making process is to analyze the problem
in depth. This is necessary to classify the problem in order to know who must
take the decision and who must be informed about the decision taken. Here, the
following four factors should be kept in mind:
1.
Futurity of the decision,
2.
The scope of its impact,
3.
Number of qualitative considerations involved,
and
4.
Uniqueness of the decision.
3.
Collecting Relevant Data: After defining the
problem and analyzing its nature, the next step is to obtain the relevant
information/ data about it. There is information flood in the business world
due to new developments in the field of information technology. All available
information should be utilised fully for analysis of the problem.
4.
Developing Alternative Solutions: After the
problem has been defined, diagnosed on the basis of relevant information, the
manager has to determine available alternative courses of action that could be
used to solve the problem at hand. Only realistic alternatives should be
considered. It is equally important to take into account time and cost
constraints and psychological barriers that will restrict that number of
alternatives.
5.
Selecting the Best Solution: After preparing
alternative solutions, the next step in the decision-making process is to
select an alternative that seems to be most rational for solving the problem.
The alternative thus selected must be communicated to those who are likely to
be affected by it. Acceptance of the decision by group members is always
desirable and useful for its effective implementation.
6.
Converting Decision into Action: After the
selection of the best decision, the next step is to convert the selected
decision into an effective action. Without such action, the decision will
remain merely a declaration of good intentions. Here, the manager has to
convert 'his decision into 'their decision' through his leadership.
7.
Ensuring Feedback: Feedback is the last step
in the decision-making process. It is like checking the effectiveness of
follow-up measures. Feedback is possible in the form of organised information,
reports and personal observations. Feed back is necessary to decide whether the
decision already taken should be continued or be modified in the light of
changed conditions.
Every step in the decision-making process is important and needs
proper consideration by managers. This facilitates accurate decision-making.
Or
(b) Briefly
explain the different bases of departmentation. 11
Ans: Departmentation:
The process of dividing activities
into units and subunits is referred to as departmentation. The term
departmentation is used in a generic sense n is not only confined to the
creation of such units as are called departments, but it includes divisions,
sections and jobs also.
Dividing up work calls or identification of total activities and
classification of such activities into units and subunits. There are three
bases for primary grouping of activities at the second level of the
organisation just below the top level. Units at the second level are commonly
called departments when business functions are adopted as the pattern of
grouping activities. Such units go by the name of divisions when either
products manufactured or territories are adopted as the means of classifying activities.
There are, however, two approaches to departmentation- top down
and bottom-up approaches. In the top-down approach, activities are divided step
by step downward form the chief executive's job to the operating jobs. In the
bottom-up approach, the division of activities is carried on in a reverse
order. Starting form operating jobs, there arise sections form combining some
correlated jobs, departments from combining some sections and finally the chief
executive position form putting departments together. While the top-down
approach gives emphasis on co-ordination and managerial action, the bottom-up
approach gives emphasis on co-ordination and managerial action, the bottom-up
approach focuses attention on employee performance. Although the top-down approach
is easy for understanding the departmentation process, both the approaches are
utilized in actual practice
Bases or
Methods of departmentation
Departmentation provides motivation by
developing feeling of autonomy to the extent possible. There are several bases
of departmentation. The more commonly used bases are function, produt,
territory, process, customer, time etc. Some of these bases are
internal-operation – oriented like function, process, time while others like
product, territory and customer are output-oriented.
a.
Functional Departmentation: The grouping of common or homogeneous
activities to form an organisation unit is known as functional departmentation.
Functional departmentation is the most widely used basis for organising
activities and is present almost in every large organisation at some level.
Functional
departmentation is most commonly used because it offers certain advantages
which include advantages of specialization, ensuring performance of activities
necessary for the achievement of organisational objectives, elimination of
un-necessary activities, easier control over functions, easier way for
pinpointing training need of the managers and maintaining the relative
importance of functions in the organisation.
b. Product wise
departmentation: Product departmentation involves the grouping
together of all activities necessary to manufacture a product or product line.
Product departmentation is preferred for product expansion and diversification
when manufacturing and marketing characteristics of each product are of primary
concern. Product departmentation offers several advantages places attention to
product lines, reduces problems of coordination for different products,
provides opportunities for further diversification and expansion of organisation
and provides product specialization necessary for managers specially when each
product is different from other.
c.
Territory – wise Departmentation:
Territorial
or geographical departmentation is specially useful to large-sized
organisations having activities which are physically or geographically spread such as banking,
insurance, transportation etc., Territorial departmentation provides certain
efficiency in operation. Local factors such as customers, culture, styles,
preferences etc., always affect organisational functioning.
d.
Production processes – wise departmentation: In
process departmentation, processes involved in production or various
types of equipments used are taken as basis for departmentation. When the
production activities involve the use of several distinctive processes, these
can be used as the base for grouping of activities. Such activities may be
textiles, oil production etc., The process are set in such a way that a series
of operations is feasible making operations economic. It provides advantages of
specialization required at each level of total processes, maintenance of plant
can be done in better way, and manpower can be utilized effectively.
e.
Customer – wise departmentation:
Customer
based departmentation is basically
market – oriented in which departments are created around the markets served or
around marketing channels. The basic idea of this departmentation is to provide
services to clearly identified groups of customers. Each group of customers has
different purchase behavior, payment schedule, demand pattern etc., Therefore
they can be attracted to the organisation’s business by satisfying them by
providing services, payment schedule demand pattern etc.
6. (a) Evaluate the Abraham Maslow’s
theory of motivation. 11
Ans: Maslow's Hierarchy of Needs
Maslow Abraham proposed his theory in the
1940s. This theory, popularly known as the Hierarchy of Needs assumes that
people are motivated to satisfy five levels of needs: physiological, security,
belongingness, esteem and self-actualization needs. The figure 9.1 shows
Maslow's hierarchy of needs
Maslow suggested that the five levels
of needs are arranged in accordance with their importance, starting from the
bottom of the hierarchy. An individual is motivated first and foremost to
satisfy physiological needs. When these needs are satisfied, he is motivated
and 'moves up' the hierarchy to satisfy security needs. This 'moving up process
continues until the individual reaches the self-actualization level.
a)
Physiological needs: Physiological needs
represent the basic issues of survival such as food, sex, water and air. In
organisational settings, most physiological needs are satisfied by adequate
wages and by the work environment itself, which provides employees with rest
rooms, adequate lighting, comfortable temperatures and ventilation.
b)
Security or safety needs: Security or safety
needs refer to the requirements for a secure physical and emotional
environment. Examples include the desire for adequate housing and clothing, the
need to be free from worry about money and job security and the desire for safe
working conditions. Security needs are satisfied for people in the work place
by job continuity, a grievance resolving system and an adequate insurance and
retirement benefit package.
c)
Social needs: Belonging or social needs are
related to the, social aspect of human life. They include the need for love and
affection and the need to be accepted by one's peers. For most people these
needs are satisfied by a combination of family and community relationships and
friendships on the job. Managers can help ensure the 'satisfaction of these
important needs by allowing social interaction and by making employees feel
like part of a team or work group.
d)
Esteem needs: Esteem needs actually comprise
of two different sets of needs:
i.
The need for a positive self-image and
self-respect.
ii.
The need for recognition and respect from
others.
Organisations
can help address esteem needs by providing a variety of external symbols of
accomplishment such as job titles and spacious offices. At a more fundamental
level, organisations can also help satisfy esteem needs by providing employees
with challenging job assignments that can induce a sense of accomplishment.
e)
Self-actualization needs: At the top of the
hierarchy are those needs, which Maslow defines the self-actualization needs.
These needs involve realizing one's potential for continued: growth and
individual development. Since these needs are highly individualized and
personal, self-actualization needs are perhaps the most difficult for managers
to address. Therefore, an employee should try to meet these needs on his own
end.
However,
an organisation can help his employee by creating a climate for fulfillment of
self-actualization needs. For instance, an organisation can help in fulfillment
of these needs by encouraging employee’s participation in decision-making
process and by providing them with an opportunity to learn new things about
their jobs and organisation. This process of contributing to actual
organisational performance helps employees experience personal growth and
development associated with self-actualizing.
Critical
Analysis of Maslow’s Theory
A number of research studies have been
undertaken to see the validity of hierarchy of needs. Lawler and Suttle
collected data on 187 Managers in two different organisations for a period of
six months to one year. No evidence was found to support Maslow's theory. They
found there were two levels of needs-biological and other needs- and that other
needs would emerge only when biological needs were reasonably satisfied. A
survey conducted in India of 200 factory worker revealed that they give top
priority to job security, earnings and personal benefits-all lower other needs.
It is generally seen that needs do not
follow Maslow's hierarchy. The hierarchy is determined by individuals
differently. They proceed to follow their own pattern of needs satisfaction.
Some people may try for self-actuating needs rather than lower needs. For some
persons esteem needs are more important than social needs.
There is no cause effect relation
between and need and behavior. A particular need may cause behavior in
different ways in different person. Similarly, one particular behavior may
result due to different needs. It is said that higher needs motivate a person
when lower needs are reasonably satisfied. The word 'reasonably satisfied' is a
subjective matter. The level of satisfaction may be different for persons.
Or
(b) Discuss
the various steps of the process of control. 11
Ans: Steps in Controlling Process
In order to perform his control
functions, a manager follows three basic steps. First of all, he establishes
the standards of performance to ensure that performance is in accordance with
me plan. After this, the manager will appraise the performance and compare it
with predetermined standards. This step will lead the manager to know whether
the performance has come up to the expected standard or if there is any
deviation. If the standards are not being met, the manager will take corrective
actions, which is the final step in controlling.
1)
Establishing standards: A standard acts as a
reference line or basic of comparison of actual performance. Standards should
be set precisely and preferably in quantitative terms. It should be noted that
setting standards is also closely linked with and is an integral part of the
planning process. Different standards of performance are set up for various
operations at the planning stage, which serve as the basis of any control
system. Establishment of standards in terms of quantity, quality or time is
necessary for effective control. Standards should be accurate, precise,
acceptable and workable. Standards should be flexible, i.e., capable of being
changed when the circumstances require so.
2)
Measurement of performance: This step involves
measuring of actual performance of various individuals, groups or units and
then comparing it with the standards, which have already been set up at the
planning stage. The quantitative measurement should be done in cases where
standards have been set in quantitative terms. In other cases, performance
should be measured in terms of quantitative factors as in case of performance
of industrial relations manager. Comparison of performance with standards is comparatively
easier when the standards are expressed in quantitative terms.
3)
Comparison: This is the core of the control
process. This phase of control process involves checking to determine whether
the actual performance meets the predetermined or planned performance. Manager
must constantly seek to answer, “How well are we doing?” When a production
supervisor checks the actual output or performance of his department with the
production schedule, he is performing comparison aspect of control. When-an
executive calculates the performance of his subordinates once in six months
or annuity, he is performing comparison
aspect of control. Checking return on in investment is a comparison phase of
control.
4)
Taking corrective action: The final step in
the control process is taking corrective actions so that deviations may not
occur again and the objectives of the organisation are achieved. This will
involve taking certain decision by the management like re-planning or redrawing
of goals or standards, assignment of clarification of duties. It may also
necessitate reforming the process of selection and the training of workers.
Thus, control function may require change in all other managerial functions. If
the standards are found to be defective, they will be modified in the light of
the observations.
7. (a) Describe the nature and
importance of marketing. 6+6=12
Ans: Marketing:
Marketing
is an ancient art and is found everywhere. Formally or informally, people and
organizations engage in a vast numbers of activities relating to exchange of
goods and services that could be called marketing. Marketing is a social
process by which individuals and groups obtain what they need and want through
creating, offering and freely exchanging products and services of value with
others. Marketing deals with identifying and meeting human and social needs or
it can be defined as “meeting needs profitably”.
In the words of Philip Kotler,
“Marketing is human activity directed at satisfying needs and want through
exchange process.”
From the above discussion, we can say
that marketing is the process of exchange of goods and services and includes
all those activities which helps in exchange of goods and services.
Nature of
marketing
Buyer and seller affect the demand for
products in aggregate areas, market includes both the place and region which
buyers and sellers are in a free inter course with another.
1)
Marketing is a customer focus: Market intense to satisfy and delight
the customer, the activities of marketing must be directed and focused at the
customer marketers can remain in customers mind. As they are provided value for
what they spend.
2)
Marketing must deliver value: Marketer has to track customer needs and
deliver the product as per their requirement. The co operate storage must be aimed
at delivering greater customer value than competitors.
3)
Marketing is business: When a customer is the focus of all
activities the marketer has not to search customer to see response to his
product. Customer group is decided from whom the product is prepared and
presented.
4)
Marketing is surrounded by customer need: Marketing starts with identification
of customer needs and requirements’. These are termed into probable features
that might satisfy the basic needs
5)
Marketing is a part of total environment: Total environment mainly defined as
the combination of all resources and institutions which are directly related to
the production, distribution of goods, services, ideas, places and persons for
satisfaction of human needs.
6)
Marketing systems effect companies strategies: Marketing
has its own sub-systems which interact with each other to turn complete
marketing system that is responsible to company’s marketing strategy.
Importance
and Uses of Marketing (Role of Marketing)
Marketing is
a unique function of business which satisfies social values, needs and wants of
an individual. It serves as the springboard for all industrial production. The
importance of marketing can be studied under the following heads:
A. Uses to
the Society
(1) Employment
of Various Persons: Since the things are manufactured or produced due to
marketing, hence many people get employment through the production activities.
Transport, storage and wholesale and retail services cover many persons. In
this way, it might be said that by marketing the employment is created.
(2) Availability
of Various Products for Use: Today, the sphere of marketing has become
worldwide or international. Due to it, the products manufactured in the foreign
lands too become available for consumption. All this could become possible due
to the growth of the marketing and its development.
(3) Increase
in the National Income of Country: If the marketing activities are
efficiently undertaken and things are produced in accordance with the needs or
requirements of the customers, there must be some increase in the demand of
the things. The production goes up which leads to the increase in the national
income.
B. Uses to
the Producers
(1) Helpful
in Earning More Profits: Whenever any manufacturer produces some
commodity, he has to seek the help of so many people in letting the same reach
the hands of the consumers. For instance, there is the need of the middlemen,
the godown owners, the traders, the owners of transport companies, etc. By
establishing proper distribution channel, more profits can be earned.
(2) Getting
Information Regarding Demand. By the study of marketing, the producers
are able to get information regarding the changing demands.
C. Uses to
the Consumers
While purchasing the products, the
consumers must have full knowledge of the things. This can be possible only
through marketing. By the study of marketing, the consumer is able to acquire
knowledge as to how the middlemen resort to their exploitation. For avoiding
the middlemen's exploitation, the consumer co-operative societies are being
promoted and developed.
D. Uses to
the Middlemen
By the 'middlemen' is meant those
persons who send the products from the producer to the consumer. The lower are
the expenses of the middlemen, the greater is their profit. By studying the
marketing, they get the knowledge as to how the expenses of distribution be
kept lower. Unless the middlemen possess sufficient knowledge of marketing,
they can't become successful.
E. Uses to
the Nation
With the help of marketing, in the
progressive and developing countries too, good managers and entrepreneurs can
be encouraged. For resorting to the most efficient use of the resources available
in the country, marketing of the commodities is very necessary. By the study of
marketing, the economy could be kept safeguarded against the evil effects of
instability. Only due to the marketing, the processes of production and
distribution continue to exist. In it the condition of full employment could be
achieved. Really speaking, marketing occupies an important role in the economic
development.
Or
(b) What do
you mean by ‘FinancialManagement’? Briefly discuss itsobjectives. 4+8=12
Ans:
Meaning and Definitions of Financial Management/Business Finance/ Corporation
Finance
Financial management is management
principles and practices applied to finance. General management functions
include planning, execution and control. Financial decision making includes
decisions as to size of investment, sources of capital, extent of use of
different sources of capital and extent of retention of profit or dividend
payout ratio. Financial management, is therefore, planning, execution and
control of investment of money resources, raising of such resources and
retention of profit/payment of dividend.
Howard and
Upton define financial management as "that administrative area or set of
administrative functions in an organisation which have to do with the
management of the flow of cash so that the organisation will have the means to
carry out its objectives as satisfactorily as possible and at the same time
meets its obligations as they become due.”
According
to Guthamann and Dougall,” Business finance can be broadly defined as the
activity concerned with the planning, raising, controlling and administering
the funds used in the business.”
Bonneville
and Dewey interpret that financing consists in the raising, providing and
managing all the money, capital or funds of any kind to be used in connection
with the business.
Osbon
defines financial management as the "process of acquiring and utilizing
funds by a business”.
Considering
all these views, financial management may be defined as that part of management
which is concerned mainly with raising funds in the most economic and suitable
manner, using these funds as profitably as possible.
Need/Objectives
of Business Finance
Business finance is required for the
establishment and existence of every business organization. Finance is required
not only to start the business but also to operate it, it expand for modernize
its operations and to secure stable growth. The importance of business finance
arises basically to bridge the time gap. Manufacturers require business finance
to bridge the time gap between the purchase of raw material and other supplies
for production and recovery of sales. Traders require finance to bridge the
time gap between the purchase of goods and recovery of sales. The need for
business finance arises for the following purposes:
1.
To acquire
Fixed Assets: Every business organization whether manufacturing or trading needs
finance to acquire some fixed assets. Manufacturers need finance to acquire
land & building, plant & machinery, furniture etc. Traders need finance
to acquire shops for sale of goods, godown for storage of goods and vehicles
for distribution of goods.
2.
To
purchase raw materials/goods: Manufacturers need finance to acquire
raw-materials and consumable stores for production. Traders need finance to
acquire goods for distribution.
3.
To acquire
service of human being: Manufacturers need finance to pay their
workers, supervisors, managers and other staff employed by them. Traders need
finance to pay their staff employed by them.
4.
To meet
other operating expenses: Every organization needs finance to meet day
to day other operating expenses like payment for electricity bills, water
bills, telephone bills, travelling & conveyance of staff, postage &
telegram expenses & so on.
5.
To adopt
Modern Technology: With fast changing technology, business
organizations need finance to modernize their plans & machineries,
production methods and distribution methods. An enterprise may decide to
replace outdated and obsolete assets with new assets to operate more
economically.
6.
To meet
contingencies: Every organization needs finance to meet the ups and downs of
business and unforeseen problems.
7.
To expand
existing operations: Every organization needs finance to expand
its existing operations. For example, a company manufacturing Pen Drives at a
rate of 10,000 per day needs finance to increase its plant capacity to
manufacture 20,000 Pen Drives per day.
8.
To
diversity: Every organization which decides to diversify needs finance to
add new products to the existing line. For example, the company manufacturing
Pen Drive needs finance to add new products say Ganga Water.
9.
To avail
of business opportunities: Finance is required to avail of business
opportunities. For example, where raw-materials are available at heavy cash
discounts, the enterprises need finance to avail of this opportunity.
Finance is
said to be life blood of business. It is required not only at the time of
setting up of business but at every stage during the existence of business. It
must be available at the time when it is needed. It must also be adequate for
the purpose for which it is needed. Thus, finance is required to bring a business
into existence, to keep it alive and to see it growing. Men, materials,
machinery and managers can be brought together and engaged in business when
adequate finance is available. Many business firms are known to have failed
mainly due to shortage of finance. The importance of finance has increased in
modern times for two reasons viz., (i) the business activities are now
undertaken on a much larger scale than in the past, and (ii) the manufacturing
process has become more complex than it used to be. With the growth in size and
volume of business and with the increasing complexity of production and trade
there is growing need for finance.
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